REACTION OF INVESTORS TO THE GREEN BOND ISSUANCE ANNOUNCEMENTS: EVENT STUDY ON GREEN BOND ISSUES OF BANKS IN TURKEY

Abstract

Green bonds are a financial instrument issued by issuing companies and institutions to finance sustainable, green projects related to climate change and the environment. It is necessary to examine whether the equity markets consider this new form of financing, which differs from traditional bonds, as important in terms of using the obtained funds in sustainable investments. This study examines the reaction of the stock market to the green bond issuance announcement. Banks traded on BIST and issuing green bonds are included in the study. The Case Study method was used to evaluate whether the green bond issuance was rewarded by the investors. Of the nine issuances by six listed banks, only three resulted in cumulative abnormal returns. Daily abnormal returns, on the other hand, were too irregular and far from the event day to be directly related to the relevant event. It has been seen that the investors gave the most obvious reaction to Yapı Kredi Bank's issue on 21.01.2020. On the other hand, the issuances of İşbank on 21.08.2019 and Akbank on 22.06.2021 also created significant positive CAR values. Contrary to the positive market reaction of issuances in many markets, there is no evidence that green bond issuances make a significant contribution to shareholder value in Turkey.